Broker Suspended for Excessive Trading in Mutual FundsBy Tom Steinert-ThrelkeldAn Arizona broker has been suspended for excessive trading in mutual funds.William Bailey, formerly a broker with the NEXT Financial Group in Mesa, Ariz., has been put on the sidelines for two years by the Financial Industry Regulatory Authority for switching customers in and out of mutual funds, for average of two months per investment.Bailey also engaged in discretionary trading without receiving prior written approval from his customers, the independent regulator of brokers said.Bailey recommended 484 short-term switch transactions in seven customer accounts, in 2006 and 2007, FINRA said. He “repeatdly sold mutual funds less than one year after purchasing them, and purchased new mutual funds with the proceeds,’’ the regulator said.With the frequent switches, his customers held their mutual funds for only 60 days, on average. The seven customers ranged in age from 66 to 93 and “were all unsophisticated investors,’’ FINRA said.Bailey could not be immediately reached for comment.FINRA said the customers paid more than $147,000 in sales charges and trading fees. Bailey received more than $120,000 in commissions, from those payments.Bailey, the regulator said, frequently traded in his customers' accounts without first obtaining their permission and improperly completed customer account forms to make it appear the customers approved of the trading. “Bailey rapidly switched his elderly and unsophisticated customers in and out of mutual funds with high costs, providing a benefit to Bailey instead of to his customers,’’ said Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, In settling the case, Bailey neither admitted nor denied the charges, but consented to its findings, FINRA said.An Arizona broker has been suspended for excessive trading in mutual funds.
William Bailey, formerly a broker with the NEXT Financial Group in Mesa, Ariz., has been put on the sidelines for two years by the
Bailey also engaged in discretionary trading without receiving prior written approval from his customers, the independent regulator of brokers said.
Bailey recommended 484 short-term switch transactions in seven customer accounts, in 2006 and 2007, FINRA said.
He “repeatdly sold mutual funds less than one year after purchasing them, and purchased new mutual funds with the proceeds,’’ the regulator said.
With the frequent switches, his customers held their mutual funds for only 60 days, on average.
The seven customers ranged in age from 66 to 93 and “were all unsophisticated investors,’’ FINRA said.
Bailey could not be immediately reached for comment.
FINRA said the customers paid more than $147,000 in sales charges and trading fees. Bailey received more than $120,000 in commissions, from those payments.
Bailey, the regulator said, frequently traded in his customers' accounts without first obtaining their permission and improperly completed customer account forms to make it appear the customers approved of the trading.
“Bailey rapidly switched his elderly and unsophisticated customers in and out of mutual funds with high costs, providing a benefit to Bailey instead of to his customers,’’ said FINRA Executive Vice President and Chief of Enforcement Brad Bennett.
In settling the case, Bailey neither admitted nor denied the charges, but consented to its findings, FINRA said.
